9

CHAP TER

Achieving Operational
Excellence and Customer
Intimacy: Enterprise Applications

Learning Objectives
After reading this chapter, you will be able to answer the following questions:
9-1 How do enterprise systems help businesses achieve operational
excellence?
9-2 How do supply chain management systems coordinate planning,
production, and logistics with suppliers?
9-3 How do customer relationship management systems help firms achieve
customer intimacy?
9-4 What are the challenges that enterprise applications pose, and how are
enterprise applications taking advantage of new technologies?

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CHAPTER CASES
Alimentation Couche-Tard Competes Using Enterprise Systems
Unilever Unifies Globally with Enhanced ERP
DP World Takes Port Management to the Next Level with RFID
Customer Relationship Management Helps Celcom Become Number One

VIDEO CASES
Life Time Fitness Gets in Shape with Salesforce CRM
Evolution Homecare Manages Patients with Microsoft Dynamics CRM
Instructional Video:
GSMS Protects Patients by Serializing Every Bottle of Drugs

364
 Alimentation Couche-Tard Competes Using
Enterprise Systems

W
hen Alimentation Couche-Tard purchased Statoil Fuel and Retail
(SFR) in April 2012, it was the Canadian convenience store giant’s
most ambitious acquisition to date (€2.058 billion). SFR, a division of
Statoil, the Norwegian State Oil Company, had been spun off from its parent in
October 2010. The purchase added 2,300 retail fuel stations—most full-service
with a convenience store—throughout North America and expanded Couche-
Tard’s reach to eight European countries—Norway, Sweden, Denmark, Poland,
Estonia, Latvia, Lithuania, and Russia. In 2016 the firm had 12,000 sites and
employed over 105,000 people.
SFR operates in both the B2C (sales to consumers) and B2B (sales to other
businesses) sectors. Fuel products including gasoline blends, diesel fuels, bio-
fuels, and LPG (liquefied
petroleum gas) generate 70
percent of its business. The
full-service retail stations
offer product lines that differ
according to operator and
location factors. Some prefer
a product mix that concen-
trates on auto supplies and
services while others focus
on food-related products,
beverages, and even fast-
food. SFR’s 12 terminals, 38
depots, and 400 road tankers
provide bulk sales to com-
mercial customers, includ-
ing bus and car rental com-
panies, road construction
crews, and independent
resellers.
Couche-Tard welcomed
both the opportunities and © trondur/123rf.com
the challenges of its acquisition. Immediate synergies between Couche-Tard
and SFR could not completely cover the remaining expenses from SFR’s split
from Statoil, rebranding efforts, and the replacement of an antiquated IT infra-
structure and enterprise resource planning (ERP) system. The old system
used different processes in each country and market, resulting in over 5,000
custom software objects for the IT department to manage in addition to mas-
sive operational inefficiencies.
SFR needed to maximize supply chain efficiency for its three closely related
value chains—the fuel value chain, the grocery value chain, and the lubri-
cants value chain. All corporate functions that provided shared services to the

365
366 Part Three Key System Applications for the Digital Age

value chains had to be standardized and workplace activities coordinated for its
18,500 employees. Finally, SFR managers wanted an advanced pricing method
for fuel sales to maximize profits in its core low-margin business.
Oracle’s JD Edwards EnterpriseOne enterprise resource planning system was
chosen as the basic platform, and a Web services interface was developed within
the ERP system to convert all data into a single format. This common source
of master data now drives all transactions throughout the supply chains as well
as financial and other reports generated by the Oracle Business Intelligence
Suite. Stock availability and average sales at each service station feed a real-
time planning program that projects expected demand and feeds the data to a
third-party distribution planning system. Onboard computers convey product
types and quantities to tanker drivers at terminals and delivery locations. Fuel
restocking, delivery, and confirmation occur automatically.
To coordinate workplace activities, Oracle Fusion Middleware integrates data
management and communication across social, mobile, and cloud technolo-
gies and among multiple systems and regions. Called the “Connect Project,” the
software coordinates dozens of interfaces throughout the supply chain, imple-
ments a consistent fuel pricing structure, and manages multiple complicated
excise taxes and regulations.
In 2014 Statoil began a migration from Oracle database software to SAP’s
Business Planning and Consolidation Application. As a result, in 2015 Statoil
achieved financial consolidation six times faster than before, data processing
speeds increased fifteen times, and opening and closing periods for work status
is now eight times faster than before.
In 2015 Couche-Tard re-branded its SFR retail stores to Circle K stores. Today
it’s one of the largest global players in the convenience store market space with
over 12,000 sites in Canada, the U.S., Asia, and Europe, and employs more than
100,000 people. In 2016 the company announced it’s largest ever acquisition
of Texas-based CST Brands, which will bring it an additional 2,000 locations in
the south and southwest U.S. states. The firm’s prior investments in enterprise
systems enable it to manage a sprawling global network of convenience stores.
The company’s executives promise to double the size of the firm once more in
the next five years. Not bad for a company that started in 1980 with a single
store in Quebec.

Sources: “Alimentation Couche Tard Inc. Is Severely Undervalued,” by Joey Frenette, The
Motley Fool, Fool.com, March 1, 2017; “Couche-Tard’s Alain Bouchard Has a Bold Vision: ‘We
Will Double the Size of This Company Again’”, by Karl Moore, businessfinancialpost.com,
December 8, 2016; “After Shareholder Rebuff Last Year, Couche-Tard Gets Its Focus Back with
Largest-Ever Acquisition,” by Barry Crutchley, businessfinancialpost.com, August 22, 2016;
“Annual Report 2016,” Alimentation Couche-Tard Inc., http://corpo.couche-tard.com; Alyn
Bailey, “Statoil Fuel & Retail the World’s First SAP to Oracle JD Edwards Migration,” http://
www.pcubed.com/bulletins, accessed January 2, 2016; “Statoil: Accelerating Planning and
Financial Close Cycles with SAP® EPM powered by SAP HANA® and SAP MaxAtten-
tionTM,” dam.sap.com/28274_Statoil_BTS.htm, accessed January 2, 2016; Jade Vachon,
“Statoil Switches from an Oracle DB to the SAP HANA Platform with SAP MaxAttention,”
SAP.com, February 21, 2014.

C ouche-Tard and Statoil’s efforts to standardize and integrate corporate func-

tions into the supply chain and coordinate workplace activity illustrate
the impact of ERP systems on supply chain management (SCM). Couche-Tard
 Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications 367

Business
Challenges
• Plan production
• Establish inventory • Volatile demand
requirements • Long production lead times
Management
• Select new • Manual planning processes
forecasting
technology

• Receive customer
orders Information
Organization Business
• Replenish inventory System Solutions
• Revise supply chain
processes
• Reduce costs
• Forecast demand more • Increase sales
accurately • Increase customer
• Deploy SAP Business • Reduce forecast time satisfaction
Objects Web Technology
Intelligence
• Deploy SAP Business
objects dashboards
• Integrate with SAP APO

did not have a single source of business data nor uniform methods for han-
dling many critical SCM functions. Inventory holding costs were unnecessarily
high, the IT department was strained, and lack of coordination was negatively
impacting workplace productivity.
The chapter-opening diagram calls attention to important points raised by
this case and this chapter. All transactions throughout Couche-Tard’s supply
chains are now in a common and consistent format that feeds directly into its
reporting software. The integrated ERP environment enables real-time plan-
ning based on stock availability and average sales at each service station, and
a real-time fuel value chain can now accommodate variable demand from both
consumer and business customers.
Benchmarks against which to assess future results by country, terminal, or
market are being developed using the advanced pricing method developed by
the Connect team. On the B2B side, managers will be able to quickly assess
the effects of pricing structures and even sales reps will be able to evaluate the
effects of purchasing terms.
Here are some questions to think about: How did Couche-Tard’s lack of stan-
dardized processes affect its business operations? How were Couche-Tard’s
employees and supply chain management affected by the adoption of stan-
dardized interfaces? Why did Couche-Tard retain its legacy systems instead of
replacing them entirely?

9-1 How do enterprise systems help businesses

achieve operational excellence?
Around the globe, companies are increasingly becoming more connected, both
internally and with other companies. If you run a business, you’ll want to be
able to react instantaneously when a customer places a large order or when a
shipment from a supplier is delayed. You may also want to know the impact of
these events on every part of the business and how the business is performing